NEWPORT BEACH, CA — 08/24/09 — PIMCO, a leading global investment management firm, has launched the PIMCO 1-5 Year U.S. TIPS Index Fund, a new way to access the firm’s expertise in managing Treasury Inflation-Protected Securities (TIPS). The fund is the first in a lineup of three TIPS ETFs that PIMCO is launching to expand the range of products available to investors looking to protect against inflation. The funds will be managed by PIMCO Managing Director and Portfolio Manager Vineer Bhansali.
The PIMCO 1-5 Year U.S. TIPS Index Fund (STPZ) is the first ETF to focus specifically on the short maturity segment of the TIPS market and aims to offer investors a high degree of protection against the immediate effects of inflation on their portfolio. Shorter-dated TIPS have historically shown a significantly higher correlation with current inflation and lower volatility relative to an index that covers the entire TIPS maturity spectrum. The fund’s benchmark is the Merrill Lynch 1-5 Year US Inflation-Linked Treasury Index.
“Inflation-hedging should play a strategic role in investors’ asset allocation, particularly as we head toward a ‘New Normal’ where lower growth, increasing U.S. government debt and unprecedented fiscal stimulus could over time raise the potential for higher price pressures than have been seen in recent decades,” said Mr. Bhansali.
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PIMCO is a premier provider of “real” or inflation-hedging investment solutions and has gained deep experience as one of the most active participants in the TIPS market since its inception in 1997.
“Our introduction of TIPS ETFs complements PIMCO’s existing TIPS offerings, enabling us to extend our TIPS expertise to investors who prefer index strategies, or who prefer some of the unique attributes of ETFs,” added Mr. Bhansali. “PIMCO’s ETF platform is part of our firm’s evolution as a complete provider of investment solutions for our clients.”
In addition to providing explicit inflation protection and the potential for additional yield pick up, TIPS are U.S. Government-issued fixed-income securities that are backed by the full faith and credit of the U.S. government for timely payment of interest and principal. The principal value of TIPS is adjusted monthly according to the rate of inflation measured by the U.S. consumer price index.
In early September, PIMCO plans to launch two additional TIPS ETFs that aim to fill out the lineup of inflation-fighting investments. The PIMCO 15+ Year U.S. TIPS Index Fund (LTPZ) will focus on long-dated TIPS that are effective in hedging long-term spending needs against interest rate and inflation risks. The PIMCO Broad U.S. TIPS Index Fund (TIPZ) will give investors the combined benefits of TIPS exposure across the maturity spectrum.
PIMCO, founded in 1971, is a global asset management firm that manages investments for an array of clients, including retirement and other assets that reach more than 8 million people in the U.S. and millions more around the world. Our clients include state, municipal and union pension and retirement plans whose beneficiaries come from all walks of life, from educators to healthcare workers to public safety employees. We have a substantial individual investor client base, and work in partnership with financial intermediaries such as Registered Investment Advisors, broker/dealers, trust banks and insurance companies. We are also advisors and asset managers to central banks, corporations, universities, foundations and endowments. With offices in North America, Europe, Asia and Australia, we manage investments across a full spectrum of global financial markets. PIMCO is owned by Allianz Global Investors, a subsidiary of the Munich-based Allianz Group, a leading global insurance company.
The Merrill Lynch 1-5 Year US Inflation-Linked Treasury Index is an unmanaged index comprised of U.S. Treasury Inflation Protected Securities with a remaining term to final maturity less than 5 years and not less than 1 year. It is not possible to invest directly in an unmanaged index.
“Merrill Lynch” and “Merrill Lynch 1-5 Year US Inflation-Linked Treasury Index(SM)” are reprinted with permission. © Copyright 2009 Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”). All rights reserved. “Merrill Lynch” and “Merrill Lynch 1-5 Year US Inflation-Linked Treasury Index(SM)” are service marks of Merrill Lynch and have been licensed for use for certain purposes by the PIMCO 1-5 Year U.S. TIPS Index Fund that is based on the Merrill Lynch 1-5 Year US Inflation-Linked Treasury Index(SM), and is not sponsored, endorsed or promoted by Merrill Lynch and/or Merrill Lynch’s affiliates nor is Merrill Lynch and/or Merrill Lynch’s affiliates an adviser to the PIMCO 1-5 Year U.S. TIPS Index Fund. Merrill Lynch and Merrill Lynch’s affiliates make no representation, express or implied, regarding the advisability of investing in this product or the Index and do not guarantee the quality, accuracy or completeness of the Index, Index Values or any Index related data included herein, provided herewith or derived therefrom and assume no liability in connection with their use. As the Index Provider, Merrill Lynch is licensing certain trademarks, the underlying Index and trade names which are composed by Merrill Lynch without regard to PIMCO, this product or any investor. Merrill Lynch and Merrill Lynch’s affiliates do not provide investment advice to the PIMCO 1-5 Year U.S. TIPS Index Fund and are not responsible for the performance of the PIMCO 1-5 Year U.S. TIPS Index Fund.
Except for the historical information and discussions contained herein, statements contained in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the performance of financial markets, the investment performance of PIMCO’s sponsored investment products and separately managed accounts, general economic conditions, future acquisitions, competitive conditions and government regulations, including changes in tax laws. Readers should carefully consider such factors. Further, such forward-looking statements speak only on the date at which such statements are made. PIMCO undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
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